Financial crime and sanctions

Financial crime

As regulated businesses, insurers need to ensure that they operate in a manner consistent with their financial crime obligations under the Financial Services and Markets Act 2000. Insurers must also comply with certain rules in the Financial Conduct Authority (FCA)’s Senior Management Arrangements, Systems and Controls Sourcebook (SYSC). For guidance on the UK’s anti-money laundering (AML), combating terrorist financing (CFT) requirements, anti-bribery and corruption requirements and the Joint Money Laundering Steering Group (JMLSG) guidance for general insurers, see Practice Notes:

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Latest Insurance & Reinsurance News

IAIS publishes application paper on supervision of AI in insurance

The International Association of Insurance Supervisors (IAIS) has published the final version of its Application Paper on the supervision of artificial intelligence (AI), following a public consultation held earlier in 2025. The paper provides guidance on how supervisors and insurers can apply existing insurance core principles (ICPs) to the use of AI systems, reinforcing that expectations around governance, conduct, and risk management remain central as AI technologies are adopted in the insurance sector. It covers five key areas: risk-based supervision and proportionality, governance and accountability, robustness, safety and security, transparency and explainability, and fairness, ethics and redress. The IAIS notes that these principles are intended to support supervisors in assessing how insurers implement AI in a manner consistent with sound prudential and conduct practices. A public webinar will be held on 17 July 2025 to present the final paper and respond to stakeholder questions and will also introduce the IAIS’s new consultation on its draft Application Paper on operational resilience objectives and toolkit.

IAIS publishes high-level principles for ICS implementation

The International Association of Insurance Supervisors (IAIS) Executive Committee has published high-level principles (HLPs) for developing the implementation assessment methodology for the Insurance Capital Standard (ICS). Adopted in December 2024, the ICS is a globally comparable, risk-based measure of capital adequacy for internationally active insurance groups and represents a key element of the IAIS Common Framework for the Supervision of IAIGs. The approved principles mark a crucial step in transitioning the ICS from its adoption phase to effective implementation. They will guide the development of jurisdictional assessments scheduled to commence in 2027, as well as the creation of a self-assessment questionnaire for jurisdictions to measure their progress in implementing the ICS in 2026.

IAIS consults on draft Application Paper for insurance sector operational resilience

The International Association of Insurance Supervisors (IAIS) has published a draft Application Paper on operational resilience objectives and toolkit. The paper aims to support supervisors and insurers in assessing and addressing operational resilience in line with the Insurance Core Principles (ICPs), in response to increasing complexity, interconnectivity, and reliance on technology and third-party service providers across the insurance sector. Responses are sought by 29 September 2025 and a public background webinar will be held on 17 July 2025 to present the draft paper and address questions.

ESAs jointly consult on draft guidelines for ESG stress testing in banking and insurance

The three European Supervisory Authorities (the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority—ESAs) have published a joint consultation paper on 27 June 2025 containing draft guidelines for integrating environmental, social and governance (ESG) risks into supervisory stress tests for banks and insurers. Developed pursuant to Article 100(4) of the Capital Requirements Directive (Directive 2013/36/EU) and Article 304c(3) of the Solvency II Directive (Directive 2009/138/EC), the guidelines aim to ensure consistency, long-term considerations and common standards in ESG stress testing methodologies across the EU financial sector. They outline expectations for competent authorities regarding the design, governance and operational features of such stress tests, including the need for relevant expertise, access to high-quality ESG data and appropriate timelines for scenario analysis. Responses are sought by 19 September 2025, with a public hearing scheduled online for 26 August 2025.

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